Plus size fashion retailer City Chic shines

City Chic's shares jumped 11 per cent on Tuesday as the fashion retailer took advantage of a growing plus size womens' clothing market to post solid results in its first year as a standalone business.

City Chic's sales increased 12.6 per cent to $148.4 million in subdued retail conditions in the year to June 30, and underlying earnings before interest, tax, depreciation and amortization were up 25 per cent.

The company's shares traded 11 per cent higher at $2.

Noni B, another clothing retailer targeting plus size womenswear, attributed a 22 per cent increase in operating profits to the successful integration of brands offloaded by City Chic.

The plus size women's clothing segment is growing in importance thanks to increased prominence in fashion media, a social media led "body-inclusivity" movement, and changes in the shape and size of women’s bodies in rich countries.

City Chic chief executive Phil Ryan said the company has leveraged existing networks of plus size social media influencers in the US to increase brand awareness and connect with potential customers.

Building strong emotional connections with customers is a core part of City Chic’s strategy, as is responding to their expectations and wants.

"Product sales are the number one thing – we follow what she’s buying," said Mr Ryan.

"She tells you when she spends, and what she spends."

Sleepwear and casualwear proved popular last year.

City Chic's gross margin slid to 57.8 per cent in fiscal 2019 from 59 per cent in the previous corresponding period, thanks to increased freight costs for growing online deliveries and the growth of wholesale partnerships with the likes of ASOS and Amazon.

Online sales penetration grew to 44 per cent from 36 per cent in 2018.

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Citi analyst Craig Woolford and his team dubbed this a "good" result for the retailer, and forecast this year's 17.5 per cent growth in operating earnings this year to $28.9 million.

City Chic announced a final dividend at 1.5¢ share, payable September 30, taking the full year ordinary dividend payout to 6.5¢, including a special dividend of 2.5¢ paid in March.

“If actually anything, it was quicker this time as we’d done the first two times, and we also knew that we needed to make sure that we were on the top of our game. Everyone in the stores knew the seriousness of what we were trying to achieve,” said Mr Evans.

Noni B reported an increase of 22 per cent to $45.5 million to its underlying earnings before tax, depreciation and amortisation.

Mr Evans said the “very respectable” financial year results were a testament to how well the Noni B team had embraced the change and the hard work of all “the girls in the stores”.

He also noted the importance of the plus size market for Noni B’s future.

“Plus size for us is definitely a growing market, especially with our brands Autograph and Beme, the sales penetration online is very strong in those brands, and we don’t expect that to slow down,” said Mr Evans.

Noni B’s online sales contributions were 9.8 per cent in fiscal 2019, nearly double the 5.8 per cent recorded in the previous year. Of these online sales, 23.1 per cent came from plus size products.

The fashion retailer announced a dividend of 5.5¢ share, up from 4¢ the previous financial year.

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